Keep to short positions. Yesterday, the FKLI ended the session negatively as it charted a black candle which tested the immediate support of 1,661 pts – which we deem as still valid as it was only marginally breached at the closing. The index drifted lower throughout the session from a high of 1,688 pts to a low of 1,659 pts, before settling at 1,660 pts, implying a loss of 16.5 pts. The negative session continued to signal the ongoing retracement, which started after the failure to break above the 200-day SMA line on 7 Jun, and is still firmly in play. This is despite the daily RSI reaching the oversold level of 24. On this, we keep to our near-term negative trading bias.

With the negative bias still not showing signs of exhaustion despite the oversold daily RSI reading, we continue to recommend that traders keep to short positions – initiated at 1,732 pts (the closing level of 18 Jun). To manage risks, we revise the trailing-stop to 1,688 pts, being the high of the latest session.

We keep the immediate support at 1,661 pts, the low of 19 Jan 2017. This is followed by 1,600 pts, the next round figure. Towards the upside, the immediate resistance is set at the 1,700-pt mark. This is followed by 1,735 pts, the low of 4 Jun.

Source: RHB Securities Research - 28 Jun 2018